Activated ras oncogene transfection into suitable recipient cells has been shown to induce the metastatic phenotype. However, when the cooperating oncogene Ela was used in conjunction with rash, metastasis was only rarely seen. We have used this model system to study the correlation of basement membrane collagenolysis with metastatic propensity. The c-Ha-ras oncogene alone, or combined with v-myc, transfected into early passage rat embryo fibroblasts, induce these cells to secrete high levels of type IV collagenolytic metalloproteinase and to concomitantly exhibit a high incidence of spontaneous metastases in nude mice. Cotransfection of c-Ha-ras plus the adenovirus type 2 Ela gene yields cells which are highly tumorigenic but nonmetastatic and fail to produce type IV collagenase. Regulation of type IV collagenase levels can occur by at least two mechanisms: 1) transcriptional regulation; 2) secretion of the active versus the latent enzyme. A specific region of the enzyme has been identified which controls the active versus the latent state. Mutations in this region could cause the enzyme to be secreted in a constitutively active state.